German auto companies Daimler AG and BMW AG recorded combined sales in China of 102,497 cars during the first three months of 2011, a growth of 76 percent from last year. On the other hand, the industry has seen a slower growth to 8.1 percent, which is the weakest performance since 2009 of the same quarter.
Chief Executive Officer Klaus Maier of Daimler's Mercedes-Benz business in China revealed that the demand outstrips supply for the company’s units. He also added that the company is increasing production capacity at its German factories.
Even after Shanghai and Beijing restricted vehicle licenses in attempts to ease traffic congestion, and China ended the subsidies and tax breaks that promoted vehicle purchases, the companies experienced a rise in sales in their models including BMW's CHY296,000 ($45,300) 3-series sedan.
In addition, outdoor advertisements promoting "hedonism, lavishness and the worship of foreign things" were already banned in Beijing since April 15.
According to a Shanghai-based analyst at consultant Bain & Co., Ray Tsang, an emerging upper middle-class and wealthy population is rising. These are composed of individuals who are optimistic about their future and thus, eager to purchase luxury vehicles, such as those manufactured by BMW and Daimler.
On the other hand, J.D. Power & Associates noted that China, which is the largest auto market in the world, will see a 20-percent rise this year in luxury car sales after surging 48 percent to 459,000 vehicles in the previous year.
However, the passenger vehicle market will see a slow growth to an estimated 12 percent from 37 percent. Automakers are set to display their latest vehicle models at the Shanghai motor show on Tuesday.
Headquartered in Beijing, China, Beijing Benz was originally formed in 1984 as Beijing Jeep Corporation. A joint venture between BAIC Motor and American Motors Corporation (AMC), Beijing Jeep was considered as the first Chinese car-making joint venture with a Western partner. The joint venture continued its operation even after AMC was acquired by Chrysler in 1987 and when Chrysler merged with Daimler-Benz AG as DaimlerChrysler in 1998.
Beijing Jeep became Beijing Benz-DaimlerChrysler Automotive Co Ltd. in 2004. When DaimlerChrysler sold Chrysler to Cerberus Capital Management in August 2007, it changed its name to Daimler AG. In effect, Beijing Benz-DaimlerChrysler Automotive soon dropped DaimlerChrysler from its name.
BMW AG, meanwhile, does business in China through BMW Brilliance Automotive Ltd., which a joint venture between the German company and Brilliance China Automotive Holdings Ltd. BMW Brilliance was founded in May 2003.